[Vijay Mallya-UBHL] About Rs 3,600 Crore Recovered, Rs 11,000 Crore Still Due, SC Told; Dismisses UBHL's Appeal Against Winding Up

The Supreme Court on Monday dismissed United Breweries Holdings Ltd.'s appeal against the Karnataka High Court's decision as regards its winding up for recovery of dues payable to Kingfisher airlines."We are here against the order of winding up of UBHL, which was a corporate guarantor of Kingfisher. Vijay Mallya was also a corporate guarantor and he has been proceeded against. It was alleged that we were unable to pay back the debt to the bank and a petition was filed (before the High Court), and both the Single and the Division benches said it may be wound up. But we have been able to demonstrate that as against the debt of Rs. 6303 crores, as adjudicated by the DRT with interest, assets of over Rs. 14,500 crores are available. There is more than ample for all creditors. This is not a case for winding up. It was the defence of even the banks that all these assets have been attached by the ED", began Senior Advocate C. S. Vaidyanathan for the UBHL."Winding up is the last resort. It should not be readily accepted that the company is to be wound up. That is why we are giving so much time to you", observed Justice U. U. Lalit."The fixed assets can be classified into 3 categories- UBHL, Vijay Mallya as the individual guarantor, and other entities who have all filed affidavits submitting their assets for disbursing the loans...these are mostly in the form of shares of United Breweries Ltd. (UBL)...these attachments are at the instance of the banks for the money they had loaned to the tune of Rs. 900 crores, which was wrongfully diverted...However, all these assets had been acquired before Kingfisher had even availed of the loan. The attachments orders are under appeal both by us and the banks, which are pending. Before the PMLA court, the ED had filed an application saying that per the PMLA Act, it is for the court to decide if the attachment should continue", he continued."The fixed assets are not even valued at current value...there is a record of the number of shares sold by them. The amounts are also available...The HC should have taken into consideration all these facts. Instead, it said that these are matters which cannot be gone into", argued Mr. Vaidyanathan."What is the valuation according to them of the ill-gotten wealth? Or the Proceeds of Crime, as they are called?", asked Justice U. U. Lalit."But some assets are from 1902! We are talking of loans of 2009!", contended Mr. Vaidyanathan.Justice Lalit indicated to the attachment orders and the contents of the CBI FIR- "significant proportion of loan sanctioned by the IDBI was transferred to ICICI, Axis Bank and the Bank of Baroda and from there to other Kingfisher accounts, even outside the country. This was never used for the purpose it was sanctioned by IDBI Bank"The judge also appreciated the prima facie material available against the petitioner, as elaborated in the attachment orders."The appeal against these orders is pending! The loan was of 900 crores. What they claimed had been diverted comes to about 200-300 crores. What is attached is more than 14,500 crores! Also, the assets which have been attached were acquired long before 2009!", pressed Mr. Vaidyanathan.Justice Lalit expressed a desire to peruse the appeal memos of the banks to appreciate their submissions."They prayed for the release of the movable and immovable properties in favour of the banks. They submitted that the properties were already encumbered in their favour and that the attachment orders were passed without hearing the banks. They sought that the provisional attachment order be set aside", replied Mr. Vaidyanathan."What is the present status of the appeal?", asked Justice Lalit."They are pending...the crime alleged is diversion of loans. There is no other crime! Ultimately, that amount also has to go to the banks only! It is the banks which have to recover the money! Even the ED, in its counter-affidavit before the PMLA court, said that it leaves it to the best judgment of the court to grant the prayer to restore the properties to the banks!", advanced Mr. Vaidyanthan."What is the extent of the Proceeds of Crime?", questioned Justice Lalit."It is shown in the provisional attachment order itself! Out of the total amount sanctioned by the IDBI, the major amount was remitted outside of India. It was said to be employed towards payments of aircrafts, servicing, spare parts. There was huge variation in these payments, particularly leasing payments, in view of the type of aircraft etc...the PMLA investigation concluded that there is reason to believe that the loan sanctioned by the IDBI is not backed by marketable commodities. Accordingly, the order was passed for provisional attachment on grounds of involvement in money laundering", responded Mr. Vaidyanathan."What is the predicate of offences, schedule of offences against you?", asked Justice Lalit."Diversion of funds", replied the senior counsel."So some public servant has to be involved under the Prevention of Corruption Act?...

[Vijay Mallya-UBHL] About Rs 3,600 Crore Recovered, Rs 11,000 Crore Still Due, SC Told; Dismisses UBHL's Appeal Against Winding Up

Mehal Jain

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